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New Study: Enloe Project on Similkameen River Not Cost Effective (WA)

Today, the Columbia Bioregional Education Project (CBEP), joined by several conservation groups
including American Whitewater, issued a new economic analysis of Okanogan Public Utility
District’s (PUD) proposal to re-start hydropower generation at Enloe Dam on the Similkameen
River. The analysis, prepared by Rocky Mountain Econometrics
(RME) of Boise, Idaho, concludes that it is not possible for the PUD to sell power from Enloe Dam
at or above the cost of producing it, and that the PUD will lose $26 for every megawatt hour
produced at the dam.

“Okanogan PUD ratepayers are going to take a big hit for this expensive and unprofitable
project,” said Jere Gillespie of CBEP. “We are calling on the Okanogan PUD to replace
its out-of-date 2008 analysis and provide ratepayers with a realistic evaluation of Enloe Dam
economics. We think such an update will show that the dam project is not a wise investment for
ratepayers and should be dropped.”

Okanogan PUD has asked the Federal Energy Regulatory Commission (FERC) to issue a license to
install turbines at the existing Enloe Dam, which blocks the Similkameen River about four miles
west of Oroville, Washington. Originally built in the early 1900’s, Enloe Dam has not
generated hydropower since 1958. The current license application, pending with FERC since 2008,
is the PUD’s fourth attempt since the mid-1980’s to add power generation to the dam.
Previous licensing efforts failed due to poor economics and fish passage issues.

The Rocky Mountain Econometrics report reviewed the economic data provided by Okanogan PUD as
part of its August 2008 FERC license application. The RME economic analysis concludes that:

Market conditions for power have changed dramatically since 2008.

Construction costs for projects similar to Enloe have increased by 30% since 2008

Open market prices for electricity, which will dictate what the PUD can sell Enloe power for,
have decreased by 50%

The long-term price for Enloe power is more likely to be $43/megawatt hour (MWh) than the
$66/MWh predicted by Okanogan PUD in 2008

Okanogan PUD’s 2008 analysis did not consider lost revenues due to tourism generated by
Similkameen Falls. This report shows that, over the life of the license term, tourism losses for
the Okanogan region could approach $20 million, two-thirds of the original 2008 estimate to build
this uneconomic dam.

“The negative economics and significant impacts to local tourism make Enloe a poor plan for
the utility and for Okanogan ratepayers,” said Rich Bowers, regional coordinator for the
Hydropower Reform Coalition. “While forecasts continually change, there is a great
difference between today’s economic forecast than in 2008 when the original economic
analysis was prepared.”

Okanogan PUD expenditures have been a continuing drain for its ratepayers. On December 2, 2011
the PUD raised retail power rates in order to meet increasing operational expenses. In addition,
on December 20, the PUD adopted a budget for 2012 that reveals a five-fold increase in capital
expenditures since 2007 (from $5.7 million to $24.5 million), and more than two-fold increase in
debt principal and interest for the same period (from $1.6 million to $3.5 million).

“Enloe Dam has not operated for 50 years,” said Rachael Paschal Osborn, with the
Center for Environmental Law & Policy. “In the context of its current budget, Okanogan
PUD simply cannot afford to sink additional money into a project which will greatly increase
rates for Okanogan ratepayers.” The Enloe Dam project has been controversial for both
environmental and economic reasons. Of particular concern is the current proposal to bypass
virtually all of the river flow into the new turbines, de-watering Similkameen Falls for most of
the year. The Falls represent an important cultural/historical resource for Native American
Tribes and First Nations in the area. The Falls also represent a viewpoint/terminus for the newly
developed Similkameen River Trail, which occupies the abandoned Great Northern Railway rail bed
and is to be designated as a segment of the 1,200-mile Pacific Northwest National Scenic Trail,
which runs from the continental divide in Montana to Olympic National Park. The tourist draw of
the Similkameen River Trail is expected to bring significant revenue to the Oroville area.

“The Similkameen River and its waterfalls have recreational values that will enhance the
tourism economy of the Okanogan-Similkameen Valleys. This report shows that de-watering the falls
by the dam could cost $516,000 per year in lost tourism value,” said Thomas O’Keefe,
Pacific Northwest Stewardship Director for American Whitewater.

Rocky Mountain Econometrics produced the Enloe report on behalf of Hydropower Reform Coalition
members Columbia Bioregional Education Project, American Rivers, American Whitewater, Center for
Environmental Law & Policy, North Cascades Conservation Council, and the Washington State
Chapter of Sierra Club.